Calendar year profit sharing plan. All employees are terminated toward the end of 1998. Business has filed for bankruptcy.

Profit sharing plan will terminate in June 1999, and file with IRS for determination. Client would like to hold off on distributing benefits until end of 1999, when favorable IRS determination letter is expected to be received.

Problem -- plan provides that benefits are paid at the end of the plan year in which the employee terminates employment. In practice, benefits have been paid early in the following year (between March and May), when the asset results are known and the allocation is performed.

Can the plan sponsor choose to delay payments until IRS determination letter is received?

If all employees elect to receive their benefits now and are paid their benefits now, there would be no assets or participants included in the determination letter filing.)

Does the plan contain special provisions which govern distributions upon plan termination? Typically, there would be language giving the plan administrator some discretion as to the timing of distributions under those circumstances. Even if there is no such discretionary language, there is a very strong argument that prudence requires a fiduciary to seek a letter from the IRS before making payments, and the practice of delaying payments until a favorable letter is received is common. Thus, the argument would be that ERISA's fiduciary provisions "trump" the normal plan payment provisions.